How to Evaluate Supply Chain Software Solutions
Jesse Kelber - October 29, 2019
How are you using your ERP software? Strictly for resource planning, as intended? Or are you stretching that definition to include aspects of your supply chain management needs as well? ERP solutions are an offshoot of financial software, and most of it functions as such and can be clunky when pressed into alternative uses. A dedicated SCM software solution, on the other hand, is as flexible and multifunctional as your supply chain itself. Think of it like this: would you rather build your personal daily calendar out of an Excel spreadsheet, which is totally doable, or just use a ready-made calendar tool like Google Calendar? Yes, both are workable solutions, but only one is actually made to help you keep track of lunch dates and offer reminders for those important meetings you just can’t miss.
The supply chain management software (SCMS) market is growing steadily year over year, making it easier than ever to find the solution that fits your specific needs, while leaving room for scalability and offering the flexibility you need. To help get the ball rolling, we present a short list of questions you can ask yourself to start sorting out just what your needs truly are and help determine which solution will best meet them now and well into the future.
What’s Your Use Case?
What aspects of the supply chain are you responsible for? How about your team? The team next door? Let’s put it this way, your SCM solution should be able to handle what you need now, and offer modules or other expansion options so you’ll know everything works together smoothly moving forward. That leaves the door open for such an expansion without the added headache of finding a new solution. SCM software generally includes the following functionality, either baked in or via modules that can be added:
- Inventory management (WMS)
- PO processing
- Sales and distribution
- Supplier management/sourcing
The next piece of this question is to incorporate what industry you’re in. Scratch that, there is so much customization available in today’s SCMS suites you can narrow it down to your specific niche and find options that are just right for you. Perishables have their own set of specialized needs. Luxury goods come with a different set of constraints, as do electronics or specialty automotive parts. No matter your niche, there’s a solution tailored for you.
On-Premises, or SaaS?
Currently the standard is on-premises, however Gartner projects the majority of growth in the SCMS sector will be in software as a service (SaaS), or “cloud computing,” models moving forward. Each option has its pros and cons of course, so it will serve you to sit down and go over these carefully when determining which way to go.
On-premises SCMS advantages and disadvantages
With an on-premises solution, you license the software to run on your server. That means your internal IT team is responsible for ensuring the infrastructure is in place to support the processing and networking needs, as well as backups and planning for future expansions. When it’s time to upgrade to the newest version, your IT will need to ensure licensing is secured, and ready the servers for the deployment. A major consideration with this option is the lack of redundancy. If the servers at the main office go down or there’s a power outage, nobody will be able to access the system, no matter their location. That said, on-prem is value additive when you ensure your provider has a proven track record of solid implementation and support.
SaaS SCMS advantages and disadvantages
With a cloud-hosted solution, it’s on the provider to ensure the hardware can support each new version or update. This means it’s a more economical option for many companies, as the subscription fee covers everything, including hardware upgrades. Most cloud services have redundant serves in multiple locations, ensuring that even if there’s a disruption to the main server, you’ll be able to continue working via a backup server elsewhere on their network. Additionally, the scalability offered by software-as-a-service providers is quick and easy, simply tell them what you need, arrange the fees, and you’ll have the added capacity you need in no time. Of course, on the flip side, with everything being handled by a third-party vendor, you and your IT department have zero control over things, so should the worst case scenario come true your hands are tied.
How Much SCMS Automation?
Supply chain management in general and production planning in particular are still pretty traditional. Pen and paper are often still relied on, along with gut feelings, despite repeated attempts by IT to get things digitized. What if we told you that advanced prescriptive analytics can help define the most cost-effective plant improvements? Automation is the single most powerful and important emerging trend to hit the supply chain since steam power ushered in the industrial revolution. Sound a bit grandiose? Maybe, but we’re convinced that integrating automation technologies into your supply chain can bring about the largest improvement in ROI of any of the solutions we’re talking about today. The trick is getting the proportions right. Too much automation takes important decisions out of your hands and things can go awry quickly. While on the other hand, not enough can leave you wondering why you bothered in the first place. The key is to remember the importance of the so-called “soft skills,” and leaving processes that include them to the humans.
Will it Integrate with Your Existing IT Systems?
Even the best, most robust and powerful cloud-based supply chain management solution is limited by how well integrated it can be with your existing IT systems. If it can’t communicate with your ERP or WMS, it’s usefulness is going to be severely limited. Ensure the solutions you’re investigating provide API support so your IT can connect the systems from the back-end, making data transfers smooth and fast, rather than requiring you to copy and paste your way through the entire order history. Other systems to keep in mind when it comes to compatibility are your CRM, BI, and finance systems.
Will It Integrate with Partner Systems?
While we’re talking compatibility, what do you know about your up- and down-stream partners’ systems? In the same way that the usefulness of an SCMS solution that can’t talk to your systems is limited, think about what would happen if your new suite couldn’t handle incoming orders from a customer, alerts about supplies, or logistics delay notifications. Different stages of the value chain have very different IT needs, and therefore very different software is in use. Knowing what systems each of your partners is using (when in doubt, call) is key when deciding on an all-encompassing supply chain management software solution. Having this information ahead of time so you can work with these systems will ensure not only a smooth deployment, but it will ensure your systems continue working together seamlessly while accommodating future growth.
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